Vodafone Group has established a 50-50 joint venture with Liberty Global-owned fibre-optic broadband provider Ziggo in the Netherlands, with an estimated net value of €3.5 billion (A$5.5 billion).
The merger, which has been on the cards for the past few months, will see Vodafone's Dutch division and Ziggo create a vertically integrated communications provider in the Netherlands.
The entity will boast 3.2 million broadband, 2.6 million fixed line and 3.6 million mobile phone accounts, along with 4.2 million video subscribers.
As part of the deal, Vodafone will pay Liberty Global €1 billion (A$1.6) billion, after deducting Ziggo's €7.3 billion net debt, to equalise the ownership of the joint venture.
The two companies will need to ask European Union regulators for approval for the merger, which if granted could mean the deal is completed by the end of this year.
Cable network giant Liberty Global operates in 14 countries and is owned by United States billionaire John Malone, who brokered a deal to merge Time Warner Group and Charter Communications last year.
Liberty Global claims to have 27 million customers worldwide.
In January this year, Liberty Global was cleared by European Union regulators to buy Belgian provider KPN for A$1.95 billion.